Will 2012 Be the Year for InterOil?

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With 2012 just beginning, now's a smart time to gauge how the stocks you're interested in are likely to do this year and beyond. By knowing what stock analysts and fellow investors expect from a stock, you'll be smarter about whether you should buy it for your portfolio -- or sell it if you already own it.

Today, let's take a look at InterOil (NYS: IOC) . As I discussed last month, InterOil had a disappointing 2011, as the company's share price tumbled even as it is trying to tap natural gas sources that are conveniently located near Asia's biggest centers of demand. Could this finally be the year that InterOil soars? Below, I'll take a closer look at what people expect from InterOil and its rivals.

Forecasts on InterOil

Median Target Stock Price$77
Fiscal 2011 EPS Estimate$0.25
Fiscal 2012 EPS Estimate$0.29
Expected Annual Earnings Growth, Next 5 Years101%
Forward P/E182
CAPS Rating (out of 5)*

Sources: Yahoo! Finance, Motley Fool CAPS.

How will 2012 go for InterOil?
Analysts and investors alike have high hopes for InterOil in 2012. The target price for the stock represents about a 50% gain from current levels, and even though 2012 earnings likely won't rise significantly from last year's levels, the long-term prospects for the company are truly staggering.

The big prospect for InterOil is its liquefied natural gas project in Papua New Guinea. Although the company went through some troubles with the nation's government, the project now looks to be on track. With several companies signing contracts for InterOil to provide LNG, it now appears that the $6 billion project may have enough interest to go forward.

The South Pacific region has attracted plenty of interest from bigger energy companies, though. ExxonMobil (NYS: XOM) is also planning to export LNG through a facility in Papua New Guinea. In nearby Australia, ConocoPhillips (NYS: COP) is working with Australia Pacific LNG to ramp up natural gas exports to energy-hungry countries like China and India.

Nevertheless, increased LNG movement looks to be a huge opportunity in the years to come. Cheniere Energy (ASE: LNG) is working to open its Sabine Pass terminal to LNG exports, while EnCana (NYS: ECA) is involved in a proposed LNG facility in British Columbia. Although some are skeptical that LNG is cost-effective, the big question is whether natural gas prices will rebound. If they do, then LNG projects should get even more profitable for InterOil and its peers.

InterOil is speculative at this point, but it's made a lot of progress recently. 2012 won't get the company across the finish line, but the next 12 months should tell us a lot about InterOil's longer-term future.

If you'd rather not wait for big returns from energy, learn more about three other stocks that will prosper from $100 oil in the Motley Fool's latest special free report on energy. It's yours free, but only for a limited time, so take a look today.

Click hereto add InterOil to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

At the time this article was published Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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